Consumer Strategies Report February 2005/Management

If one company could be called a proponent for the abolition of unions, it'd be Wal-Mart. A few short years ago, butchers in a Midwest location voted on being represented by a union. Wal-Mart appeared to have finally been penetrated after decades of union efforts to get a foothold. Wal-Mart management even made efforts to meet with representatives. But as anyone who's ever dealt with Wal-Mart knows, they rarely let you do things your way: the company promptly announced a tweak in their operational structure, eliminating the job position in favor of pre-packaged meats, a move supposedly not connected to the unionization effort. Hundreds of butchers across the company were either transferred to other departments or fired.

More recently, a store in Canada received permission by Canadian government officials to form a union. After several meetings across several months with these folks, Wal-Mart announced it would be closing that one location because of poor sales, but not open a replacement (an very rare event for the retailer). The store was apparently loosing money (and a union would increase those losses). A simple and symbolic message to unionizers: you don't benefit anyone.

Society is inherently resistant to economic change, but agrees that there will be losses and gains from technological innovation. Examples are everywhere: steel workers lobby for trade barriers to protect their jobs from foreign competitive pressures, but no one lobbies for reduction in the number of ATM machines to safeguard bank teller jobs.

What about teacher's unions? What if unionization of teachers were prevented altogether, creating a free-market for talent and resources? Like a company, administrators would be free to eliminate the underperformers, as determined by parent/student (customer) feedback, not seniority or back-office politics. Teachers, however, are fiercely adamant about their rights (one may easily be lead to believe that they're adamant about their rights over student rights as well). And yet, despite the loss of librarian jobs, everyone welcomes computers and the internet to make learning more efficient.

Ironically, judges aren't unionized, and, like unionized teachers, are also shielded by performance measures because they serve for life once appointed. The rigorous process of selecting a judge has disconnected their performance from hours worked and trials heard to refinement of law. Why can't the same be applied to teachers and teaching? Mechanics and auto manufacturing? Sales associates and retailing?

By negotiating for artificial floors in compensation, unions eliminate natural market incentives to perform and produce, but most importantly, to compete. Thus employers get poor quality (and unwittingly assume a confrontational relationship with workers never intended to have that sort of relationship with employers), low innovation, and consequently must offer their goods at discounted prices.

However, in a natural market, all three return to normal, and if nothing else happened, prices would indeed go up. Prices fortunately don't remain high though, because natural competition also yields cost-containment (otherwise, it's a monopoly), and savings ideally get passed on to consumers as lower prices. Ultimately, improved competition's advantage is higher volume sales.

In natural market competition, skills gaps are unavoidable, (so many unnatural safety nets simply exacerbates the problem). With no budget for anything other than basic training (1), employees can likely be found lacking a sense of purpose and accomplishment in their jobs (and inevitably, other lifestyle routines). Their perspectives are further complicated by a fundamental belief that someone other than themselves are responsible for their actions and what they do. Individual responsibility isn't even a consideration. (This is our perspective on why management-lead treatment of many of their blue-collar jobs as "human capital arbitrage" has caused outsourcing to take off despite widespread opposition).

There are arguments that claim that encouraging pride is the best way to motivate (employees). But pride is internal, dependent on different variables for different people; getting a data miner or assistant coffee-getter to be proud of crunching numbers or getting coffee monotonously would still be a challenge. We suggest daily (or per shift) goal-setting with goals that can be met quickly and simply, and rewarded per completion, conditioning the accomplisher with incrementally positive associations of work-to-results.

No different than a fancy task list, these type of goals ideally utilize a workers expertise fully at different stages, while keeping them too occupied to think about anything other than the task at hand; too risk-averse to put their incrementally expanding rewards in danger; but most importantly, are structured around their other priorities, as performance is no longer dependent on the amount of time they work, but the number of goals they meet, allowing them to work around their other interests (2). And viola, happy, un-unionized, productive workers.

The usual combination of job description changes and reclassifications, changes in standards and procedures, enhanced training and certifications, and natural churning of workers may not be enough to completely wipe the slate clean of union elements. Geographic relocations, tiering of workers (3), enhanced internal communications (4), technological changes, and even business diversification into services are more drastic, but likely necessary ways of completely altering your workforce into a lower-cost, higher-productivity enterprise.

Disclaimer: The recommendations, commentary and opinions published herein are based on public information sometimes referenced via hyperlinks. Any similarities or likeness to any ideas or commentary from any other sources not referenced is purely coincidental. al berrios & co. cannot control any results occurring from advice obtained from this publication nor any opinion(s) conveyed by any reader of this publication.

(c) 2005. All Rights Reserved. al berrios & company, inc. Published by al berrios & co. This Report may not be reproduced or redistributed in any form without written permission from al berrios & co., subject to penalty.

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